A Drug Formulary is a List of Preferred Prescription Drugs

A List of Prescription Drugs Preferred By Your Health Plan

Prescription drugs on a pharmacy counter.
Prescription drugs on a pharmacy counter. William Thomas Cain/Getty Images

A drug formulary is a list of prescription drugs (both generic and brand name) that are preferred by your health plan.

A drug formulary is important because there is a good chance that your health plan may only pay for medications that are on this "preferred" list, unless your healthcare provider talks with your health plan and gets prior approval. Thus, you need to know what drugs are preferred by your particular coverage.

Health plans usually have a committee of practicing physicians and pharmacists who recommend drugs for the formulary based on the drug's quality, safety, and effectiveness. Most health plans will pay for medications that have been approved for sale by the U.S. Food and Drug Administration.


You will need to pay a share of the cost of the prescription; this is a fee known as copayment. Your copayment amount will depend on what "tier" your drug is in on your health plan's formulary:

  • Tier 1 drugs have the lowest copayment and usually include generic medications.
  • Tier 2 drugs have a lower copayment and usually include preferred brand-name medications.
  • Tier 3 drugs have the highest copayment and usually include non-preferred brand-name medications.

Talk to Your Provider

If you need a particular prescription, you should talk to your healthcare provider about prescribing a generic drug or a preferred brand-name drug if it is appropriate for your heath condition.

If your provider prescribes a medication that is not on the formulary and your health plan does not approve its use, you will have to pay the full cost of the medication.

Know Your Health Plan's Formulary

It is very important to know the drug formulary of your particular health plan, especially if you intend to need prescriptions of some kind.

Various health plans have different formularies with varying condition, this it is important to stay up to date on your own particular policy. When you enrolled in your health plan, you should have received a booklet that describes the formulary and lists all of the approved medications along with an explanation of the tier copayments.

Each year your plan should send you an update that includes any new changes that were made to the formulary such as new drugs added to the formulary and drugs that are no longer covered. Most plans also provide access to formularies online.

If you have a choice of health plans and need medications for a chronic illness, you should look at the different formularies and choose a plan that covers your medications.

For further information from Dr. Mike, read more about understanding your health plan drug formulary.

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